U.S. Department of Justice, Office of Justice Programs

Part III - Chapter 6: Property and Equipment

HIGHLIGHTS OF CHAPTER

  • Acquisition of Property and Equipment
  • Screening
  • Loss, Damage, or Theft of Equipment
  • Equipment Acquired With Crime Control Act Block/Formula Funds (BJA)
  • Equipment Acquired With Juvenile Justice Act (OJJDP) Formula and Victims of Crime Act (OVC) Assistance (Formula) Funds
  • Equipment and Nonexpendable Personal Property Acquired With Discretionary Funds
  • Real Property Acquired With Formula Funds
  • Real Property Acquired With Discretionary Funds
  • Federal Equipment
  • Replacement of Property (Equipment and Nonexpendable Personal Property)
  • Retention of Property Records
  • Supplies
  • Copyrights
  • Patents, Patent Rights, and Inventions

ACQUISITION OF PROPERTY AND EQUIPMENT

Recipients/subrecipients are required to be prudent in the acquisition and management of property with Federal funds. Expenditure of funds for the acquisition of new property, when suitable property required for the successful execution of projects is already available within the recipient or subrecipient organization will be considered an unnecessary expenditure.

SCREENING

Careful screening should take place before acquiring property in order to ensure that it is needed, with particular consideration given to whether equipment already in the possession of the recipient/subrecipient organization can meet identified needs. While there is no prescribed standard for such review, recipient/subrecipient procedures may establish levels of review dependent on factors such as the cost of the proposed equipment and the size of the recipient or subrecipient organization.

The establishment of a screening committee may facilitate the process; however, a recipient or subrecipient may utilize other management techniques which it finds effective as a basis for determining that the property is needed and that it is not already available within the recipient's organization.

The awarding agency's program monitors must ensure that the screening referenced above takes place and that the recipient/subrecipient has an effective system for property management.

Recipients/subrecipients are hereby informed that if the awarding agency is made aware that the recipient/subrecipient does not employ an adequate property management system, project costs associated with the acquisition of the property may be disallowed.

LOSS, DAMAGE, OR THEFT OF EQUIPMENT

Recipients/subrecipients are responsible for replacing or repairing property which is willfully or negligently lost, stolen, damaged, or destroyed. Any loss, damage, or theft of the property must be investigated and fully documented and made part of the official project records.

EQUIPMENT ACQUIRED WITH CRIME CONTROL ACT BLOCK/FORMULA FUNDS (BJA)

Equipment acquired shall be managed to ensure that the equipment is used for criminal justice purposes. Standards and procedures governing ownership, use, management, and disposition are as follows.

  1. Title. The Omnibus Crime Control and Safe Streets Act of 1968, as amended, 42 U.S.C. §3789, et seq., Section 808, requires that the title to all equipment and supplies purchased with funds made available under the Crime Control Act shall vest in the criminal justice agency or nonprofit organization that purchased the property, if it provides written certification to the State office that it will use the property for criminal justice purposes. If such written certification is not made, title to the property shall vest in the State office, which shall seek to have the equipment and supplies used for criminal justice purposes elsewhere in the State prior to using it or disposing of it in any other manner.
  2. Use and Management. A subrecipient or State shall use and manage equipment in accordance with its procedures as long as the equipment is used for criminal justice purposes.
  3. Disposition. When equipment is no longer needed for criminal justice purposes, a State shall dispose of equipment (for both the State and subrecipients), in accordance with State procedures, with no further obligation to the awarding agency.

EQUIPMENT ACQUIRED WITH JUVENILE JUSTICE ACT (OJJDP) FORMULA AND VICTIMS OF CRIME ACT (OVC) ASSISTANCE (FORMULA) FUNDS

Equipment acquired under an award shall be managed to ensure that the equipment is used for criminal justice purposes. Standards and procedures governing ownership, use, management, and disposition are as follows.
  1. Title. Title to equipment acquired under an award or subaward will vest upon acquisition in the recipient or subrecipient subject to the obligations and conditions set forth in 2 CFR Part 215.
  2. Use. A State shall use equipment acquired under an award in accordance with State laws and procedures. The awarding agency encourages the States to follow the procedures set forth in this Guide.

    Other recipients and subrecipients shall use equipment in accordance with the following requirements:

    1. Equipment must be used by the recipient or subrecipient in the program or project for which it was acquired as long as needed, whether or not the project or program continues to be supported by Federal funds. When no longer needed for the original program or project, the equipment may be used in other activities currently or previously supported by a Federal agency.
    2. The recipient or subrecipient shall also make equipment available for use on other projects or programs currently or previously supported by the Federal Government, provided such use does not interfere with the work on the projects or programs for which it was originally acquired. First preference for other use shall be given to other programs or projects supported by the awarding agency. User fees should be considered and treated as program income to the project, if appropriate.
    3. Notwithstanding program income, the recipient or subrecipient shall not use equipment acquired with funds to provide services for a fee to compete unfairly with private companies that provide equivalent services, unless specifically permitted, or contemplated by Federal statute.
    4. When acquiring replacement equipment, recipients or subrecipients may use the equipment to be replaced as a trade-in or may sell the equipment and use the proceeds to offset the cost of the replacement equipment, subject to the written approval of the awarding agency.
  3. Management.

    1. A State shall ensure equipment acquired under an award to the State conforms to State laws and procedures over property.
    2. Other recipient and subrecipient procedures for maintaining equipment (including replacement), whether acquired in whole or in part with project funds, will, at a minimum, meet the following requirements:

        (1.) Property records must be maintained which include:

          (a.) Description of the property;

          (b.) Serial number or other identification number;

          (c.) Source of the property;

          (d.) Identification of title holder;

          (e.) Acquisition date;

          (f.) Cost of the property;

          (g.) Percentage of Federal participation in the cost of the property;

          (h.) Location of the property;

          (i.) Use and condition of the property; and

          (j.) Disposition data, including the date of disposal and sale price.

        (2.) A physical inventory of the property must be taken and the results reconciled with the property records at least once every 2 years.

        (3.) A control system must exist to ensure adequate safeguards to prevent:
          (a.) Loss;

          (b.) Damage; or

          (c.) Theft of the property.

          Any loss, damage, or theft shall be promptly and properly investigated by the recipient and subrecipient, as appropriate.

        (4.) Adequate maintenance procedures must exist to keep the property in good condition.

        (5.) If the recipient or subrecipient is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return.
  4. Disposition.

    1. A State recipient shall dispose of its equipment acquired under an award to the State in accordance with State laws and procedures.
    2. Other recipients and subrecipients shall dispose of the equipment when original or replacement equipment acquired under the award or subaward is no longer needed for the original project or program, or for other activities currently or previously supported by a Federal agency. Disposition of the equipment will be made as follows:

        (1.) Items with a current per unit fair market value of less than $5,000 may be retained, sold, or otherwise disposed of with no further obligation to the awarding agency.

        (2.) Items with a current per unit fair market value of $5,000 or more may be retained or sold, and the awarding agency shall have a right to an amount calculated by multiplying the current market value or proceeds from sale by the awarding agency's share of the equipment. Seller is also eligible for sale costs.

        (3.) In cases where a recipient or subrecipient fails to take appropriate disposition actions, the awarding agency may direct the recipient or subrecipient to take other disposition actions.

EQUIPMENT AND NONEXPENDABLE PERSONAL PROPERTY ACQUIRED WITH DISCRETIONARY FUNDS

  1. Title. Title to equipment acquired with Federal funds will vest upon acquisition in the recipient subject to the obligations and conditions set forth in 28 CFR Part 66 for State and local units of government, and in 28 CFR Part 70 for other recipients.
  2. Use. A State shall use equipment acquired under an award by the State in accordance with State laws and procedures.

    Local government recipients shall use equipment in accordance with the requirements contained in the section "EQUIPMENT ACQUIRED WITH JUVENILE JUSTICE ACT (OJJDP) FORMULA AND VICTIMS OF CRIME ACT (OVC) ASSISTANCE (FORMULA) FUNDS."

    Other recipients shall use nonexpendable personal property in the project or program for which it was acquired as long as needed, whether or not the project or program continues to be supported by Federal funds. When no longer needed for the original project or program, recipients shall use the nonexpendable personal property in connection with its other federally sponsored activities in the following order of priority:

    1. Other projects of the awarding agency needing the property.
    2. Grants of a State needing the property.
    3. Projects of other Federal agencies needing the property.
  3. Management.

    1. A State shall ensure its equipment acquired under an award is in accordance with State laws and procedures over property.
    2. Local recipients and subrecipients shall ensure equipment acquired under an award is in accordance with requirements stated in the section "EQUIPMENT ACQUIRED WITH JUVENILE JUSTICE ACT (OJJDP) FORMULA AND VICTIMS OF CRIME ACT (OVC) ASSISTANCE (FORMULA) FUNDS."
    3. Other recipients' property management standards for nonexpendable personal property shall include the following procedural requirements:

        (1.) Property records shall be maintained accurately and include:

          (a.) A description of the property;

          (b.) Manufacturer's serial number, model number, Federal stock number, or other identification number;

          (c.) Source of the property, including the award number;

          (d.) Whether title vests in the recipient or the Federal Government;

          (e.) Acquisition date (or date received, if the property was furnished by the Federal Government) and cost;

          (f.) Percentage (at the end of the budget year) of Federal participation in the cost of the project or program for which the property was acquired (not applicable to property furnished by the Federal Government);

          (g.) Location, use, and condition of the property at the date the information was reported;

          (h.) Unit acquisition cost; and

          (i.) Ultimate disposition data, including date of disposal and sales price or the method used to determine current fair market value where a recipient compensates the Federal-sponsoring agency for its share.

        (2.) A physical inventory of property shall be taken and the results reconciled with the property records at least once every 2 years. Any differences between quantities determined by the physical inspection and those shown in the accounting records shall be investigated to determine the causes of the difference. The recipient shall, in connection with the inventory, verify the existence, current utilization, and continued need for the property.

        (3.) A control system shall be in effect to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft of nonexpendable property shall be investigated and fully documented. If the property was owned by the Federal Government, the recipient shall promptly notify the Federal agency.

        (4.) Adequate maintenance procedures shall be implemented to keep the property in good condition.

        (5.) Where the recipient is authorized or required to sell the property, proper sales procedures shall be established which would provide for competition to the extent practicable and result in the highest possible return.
  4. Disposition.

    1. A State shall dispose of its equipment acquired under the award by the State in accordance with State laws and procedures.
    2. Local recipients and subrecipients shall follow the disposition requirements in the section "EQUIPMENT ACQUIRED WITH JUVENILE JUSTICE ACT (OJJDP) FORMULA AND VICTIMS OF CRIME ACT (OVC) ASSISTANCE (FORMULA) FUNDS."
    3. Other recipients shall adhere to the following disposition requirements for nonexpendable personal property:

        (1.) A recipient may use nonexpendable personal property with a fair market value of less than $5,000 for other activities without reimbursement to the Federal Government, or may sell the property and retain the proceeds.

        (2.) A recipient may retain nonexpendable personal property with a fair market value of $5,000 or more for other uses provided that compensation is made to the awarding agency or its successor. The amount of compensation shall be computed by applying the percentage of Federal participation in the cost of the original project or program to the current fair market value of the property. If the recipient has no need for the property and the property has further use value, the recipient shall request disposition instructions from the awarding agency. The awarding agency shall determine whether the property can be used to meet the agency's requirements. If no requirement exists within that agency, the availability of the property shall be reported to the General Services Administration (GSA) by the Federal agency to determine whether a requirement for the property exists in other Federal agencies. The awarding agency shall issue instructions to the recipient no later than 120 days after the recipient's request, and the following procedures shall govern:

          (a.) If so instructed, or if disposition instructions are not issued within 120 calendar days after the recipient's request, the recipient shall sell the property and reimburse the awarding agency an amount computed by applying to the sales proceeds the percentage of Federal participation in the cost of the grant. However, the recipient shall be permitted to deduct and retain from the Federal share $100 or 10 percent of the proceeds, whichever is greater, for the recipient's selling and handling expenses.

          (b.) If the recipient is instructed to ship the property to other agencies needing the property, the recipient shall be reimbursed by the benefiting Federal agency with an amount computed by applying the percentage of the recipient's participation in the cost of the project or program to the current fair market value of the property, plus any reasonable shipping or interim storage costs incurred.

          (c.) If the recipient is instructed to otherwise dispose of the property, the recipient shall be reimbursed by the awarding agency for such costs incurred in its disposition.
  5. Transfer of Title. The awarding agency may reserve the right to transfer title to property acquired with Federal funds that have a fair market value of $5,000 or more to the Federal Government or a third party named by the awarding agency, when such a third party is otherwise eligible under existing statutes. Such transfers are subject to the following standards:

    1. The property must be identified in the award or otherwise made known to the recipient in writing.
    2. The awarding agency shall issue disposition instructions within 120 calendar days after the end of the Federal support of the project for which it was acquired. If the awarding agency fails to issue disposition instructions within the 120-calendar day period, the recipient shall follow standards set in 28 CFR Parts 66 and 70.
    3. When title to property is transferred, the recipient shall be paid an amount calculated by applying the percentage of participation in the purchase to the current fair market value of the property.

REAL PROPERTY ACQUIRED WITH FORMULA FUNDS

  1. Land Acquisition. Block/formula funds CANNOT be used for land acquisition.
  2. Title. Subject to the obligations and conditions set forth in the award, title to real property acquired under an award or subaward vests, upon acquisition, in the recipient or subrecipient.
  3. Use of Real Property. The recipient and its subrecipients may use real property acquired, in whole or in part, with Federal funds for the authorized purposes of the original grant or subaward as long as needed for that purpose. Subrecipients shall maintain an inventory report which identifies real property acquired, in whole or in part, with block or formula funds. The recipient or subrecipient shall not dispose of or encumber its title or other interests.
  4. Disposition. The subrecipient shall obtain approval for the use of the real property in other projects when the subrecipient determines that the real property is no longer needed for the original grant purposes. Use in other projects shall be limited to those under other federally sponsored projects or programs that have purposes consistent with those authorized for support by the State. When the real property is no longer needed as provided above, the subrecipient shall request disposition instructions from the State. The State shall exercise one of the following:

    1. Direct the real property to be transferred to another subrecipient or a criminal justice activity needing the property, provided that use of such real property is consistent with those objectives authorized for support by the State.
    2. Return all real property furnished or purchased wholly with Federal funds to the control of the awarding agency. In the case of real property purchased in part with Federal funds, the subrecipient may be permitted to retain title upon compensating the awarding agency for its fair share of the property. The Federal share of the property shall be computed by applying the percentage of the Federal participation in the total cost of the project for which the property was acquired to the current fair market value of the property. In those instances where the subrecipient does not wish to purchase real property originally purchased in part with Federal funds, disposition instructions shall be obtained from the awarding agency.

REAL PROPERTY ACQUIRED WITH DISCRETIONARY FUNDS

  1. Land Acquisition. Discretionary funds CANNOT be used for land acquisition.
  2. Title. Subject to obligations and conditions set forth in 28 CFR Parts 66 and 70, title to real property acquired under an award vests upon acquisition with the recipient.
  3. Use of Property. The use of property by the recipient is subject to the same principles and standards as outlined for property acquired with formula funds.
  4. Disposition. The recipient shall follow the same principles and standards as outlined for subrecipients, except the recipient shall request disposition instructions from the Federal agency, not the State.
  5. Transfer of Title. With regard to the transfer of title to the awarding agency or to a third party designated/approved by the awarding agency, the recipient or subrecipient shall be paid an amount calculated by applying the recipient's or subrecipient's percentage of participation in the purchase of the real property to the current fair market value of the property.

FEDERAL EQUIPMENT

In the event a recipient or subrecipient is provided federally owned equipment, the following requirements apply:

  1. Title remains vested in the Federal Government.
  2. Recipients or subrecipients shall manage the equipment in accordance with the awarding agency's rules and procedures and submit an annual inventory listing.
  3. When the equipment is no longer needed, the recipient or subrecipient shall request disposition instructions from the awarding agency.

REPLACEMENT OF PROPERTY (EQUIPMENT AND NONEXPENDABLE PERSONAL PROPERTY)

When an item of property is no longer efficient or serviceable but the recipient/subrecipient continues to need the property in its criminal justice system, the recipient/subrecipient may replace the property through trade-in or sale and subsequent purchase of new property, provided the following conditions are met:

  1. Similar Function. Replacement property must serve the same function as the original property and must be of the same nature or character, although not necessarily of the same grade or quality.
  2. Credits. Value credited for the property, if the property is traded in, it must be related to its fair market value.
  3. Time. Purchase of replacement property must take place soon enough after the sale of the property to show that the sale and the purchase are related.
  4. Compensation. When acquiring replacement property, the recipient/subrecipient may use the property to be replaced as a trade-in or the proceeds from the sale of the property to offset the cost of the new property.
  5. Prior Approval. State subrecipients shall obtain the written permission of the State to use the provisions of this section prior to entering into negotiation for the replacement or trade-in of property.

RETENTION OF PROPERTY RECORDS

Records for equipment, nonexpendable personal property, and real property shall be retained for a period of 3 years from the date of the disposition or replacement or transfer at the discretion of the awarding agency. If any litigation, claim, or audit is started before the expiration of the 3-year period, the records shall be retained until all litigations, claims, or audit findings involving the records have been resolved.

SUPPLIES

  1. Title. Title to supplies acquired under an award or subaward vests, upon acquisition, in the recipient or subrecipient, respectively.
  2. Disposition. If there is a residual inventory of unused supplies exceeding $5,000 in total aggregate fair market value upon termination or completion of the funding support and the supplies are not needed for any other federally sponsored programs or projects, the recipient or subrecipient shall compensate the awarding agency for its share. The amount of compensation shall be computed in the same manner as for nonexpendable personal property or equipment.

COPYRIGHTS

The awarding agency reserves a royalty-free, nonexclusive, and irrevocable license to reproduce, publish, or otherwise use, and authorize others to use, for Federal Government purposes:

  1. The copyright in any work developed under an award or subaward; and
  2. Any rights of copyright to which a recipient or subrecipient purchases ownership with support.

PATENTS, PATENT RIGHTS, AND INVENTIONS

If any program produces patentable items, patent rights, processes, or inventions, in the course of work sponsored by the Federal award or subaward funds, such facts must be promptly and fully reported to the awarding agency. Unless there is a prior agreement between the recipient and the awarding agency on disposition of such items, the awarding agency shall determine whether protection on the invention or discovery shall be sought. The awarding agency will also determine how rights in the invention or discovery (including rights under any patents issued thereon) shall be allocated and administered in order to protect the public interest consistent with "Government Patent Policy" (President's Memorandum for Heads of Executive Departments and Agencies, dated August 23, 1971, and statement of Government Patent Policy, as printed in 36 FR 16839). Government-wide regulations have been issued at 37 CFR Part 401 by the U.S. Department of Commerce.

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